Updated at 12.55pm:Over 500 employees were made redundant on Wednesday after Guangnan (KK) Supermarket Limited announced at midnight that it was closing down all 39 of its Hong Kong branches.
The chain, a 70 per cent subsidiary by Guangnan (Holdings) Limited, said that massive long-term losses had forced its decision to cease operating.
Guangnan chairman Ye Xuquan told a news conference that the liquidators were appointed by a Hong Kong court at 10.45am on Wednesday.
The accumulated loss had reached the stage that the asset value could no longer cover the liability, the Group said in a press release.
''We have posted notices outside our stores at midnight to inform our staff,'' spokesman Alex Chung said.
Mr Chung added that the Group was in contact with the Labour Department and there were some unspecified legal issues to work out.
Special counters were set up in Labour Department offices and employees arrived at the company's Sha Tin warehouse in the morning to meet management.
''We believe the unpaid wages for the month of June and the staff redundancy payments amount to approximate $15 million,'' said Leung Fu-wah, vice-chairman of the Federation of Trade Unions.
Last year, the Guangnan Holdings Limited, with 49 supermarket stores at that time, reported losses of $50 million. At the time the Group said it expected it woud be able to balance its books in 2001 following restructuring.
''We were informed the Guangnan Group was facing restructuring and financial difficulties half a year ago,'' a local fruit and grocery distributor said.
''Our partners warned us not to have too much business with them because of their gloomy future,'' she added.
Among the closed-down 39 supermarkets, eight were in Hong Kong Island, 12 in Kowloon and 14 in the New Territories. A KK Supermarket could also be found in each of Hong Kong's five People's Liberation Army camps.
The Group suspended share-trading in Hong Kong on Wednesday pending an announcement.
Last September, French supermarket behemoth Carrefour terminated its Hong Kong operation, again resulting in about 500 job losses and in December, media tycoon Jimmy Lai Chee-ying's online retail operation adMart closed.